Published on 15 Mar 2017
This week, James & Antony discuss the case of Connecticut’s budget shortfall. The state hopes to solve their financial problems by raiding the retirement accounts of previous Connecticut government employees who have moved out of the state, and take 30% of those savings. This plan would hurt retirees, break promises, and trap many people in the state based on a policy that may be illegal.
March 16, 2017
Words & Numbers: Blocked by a State’s Wall of Taxes
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March 15, 2017
QotD: How may I interrupt you next?
Q: What do Google, Facebook, Twitter, Apple, and Samsung all have in common?
A: Their business models involve interrupting you all day long.
Individually, each company’s interruptions are trivial. You can easily ignore them. But cumulatively, the interruptions from these and other companies can be crippling.
In the economy of the past, companies made money by being useful to customers. Now the biggest tech companies make their money by distracting you with ads and apps and notifications and whatnot. I don’t mean to sound like an alarmist, but I think this is the reason 80% of the adults I know are medicating. People are literally being driven crazy by a combination of complexity (too many choices) and the Interruption Economy.
There are days when my brain is flying in so many directions that I have to literally chant aloud what I need to do next in order to focus.
[…]
I’m wondering if you have as many distractions in your life. And if you do, can the chanting help you too? The next time you have a boring task that you know will be subject to lots of interruptions, try the chanting technique and let me know how it goes. It probably won’t cure your ADHD but it might help you ignore the tech industry’s distractions until you get your tasks done.
Bonus question: The economy has evolved from “How can I help you?” to “How can I distract you?” Can that trend lead anywhere but mass mental illness?
My hypothesis, based on observation alone, is that the business model of the tech industry, with its complexity, glut of options, and continuous interruptions are literally driving people to mental illness.
Scott Adams, “The Interruption Economy”, Scott Adams Blog, 2015-07-07.
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March 13, 2017
QotD: The legacy of nineteenth century intellectualism
In the Nineteenth Century, intellectuals raised the argument that Western Civilization was wrong about all its major conclusions, from Christianity to Democracy to Capitalism, and that a rational system of scientific socialism should and would correct these errors and replace them.
This, over the next hundred years, was attempted, with the result that in a single generation the socialists and communists and national socialists of various stripes had killed more people and wrought more ruin than all world religions combined during all the previous generations of history.
Meanwhile, the visual arts were reduced to aberrant rubbish not merely ugly and untalented, but objectively indistinguishable from the work of schizophrenics; literature reduced to porn and tales of failure and decay; science was reduced from an honest and objective pursuit of truth to a whorish tool servicing political ends, particularly the ends of environmentalist hysterics, but creeping into other areas; universities degenerated from bastions of learning protected by traditions of academic freedom to the foremost partisans in favor of speech codes and political correctness; family life was and continues to be assaulted; abortion continues to carry out a slow and silent genocide of negro babies, girl babies, and other unwanted humanoids; law enforcement has been redirected from protecting the innocent because they are innocent to protecting the guilty because they are guilty; the Fair Deal and New Deal of the socialist philosophy at its height of intellectual respectability did nothing but prolong what should have been a ten month market correction into a Great Depression that lasted ten years; Welfare programs encouraged, exacerbated, and created a permanent and unelevatable underclass in America, ruining the very lives the programs were alleged to help; Affirmative Action has made race-hatred, accusations of racism, and race-baiting a permanent part of American life, despite that no less racist nation ever has nor ever could exist.
So the Left has not only failed in everything they attempted, and failed at every promise they made, they failed in an immense, astonishing, unparalleled, and horrifying way, a way so deep and so vast and so gross as to never have been seen before in history nor ever imagined before, not even by science fiction writers. Even Orwell did not foretell of a time when men would voluntarily adopt Newspeak and Doublethink and all the apparatus of oppression, freely and without coercion. Even he, the most famous writers of dystopia of all time, could not imagine the modern day. The failure of the Left is indescribable: one can only grope for words like ‘awe-inspiring’ or ‘astronomical’ to express the magnitude. If Lot’s wife were to look steadily at what the Left has done, she would turn to a pillar of salt, so horrifying, so overwhelming, so dazzling is the hugeness of failure.
Now, when your prediction and worldview and way of life and philosophy turns out to be an utter failure of epic, nay, apocalyptic proportions, you have one of two choices. The honest choice is to return to the drawing board of your mind, and recalculate your ideas from their assumptions, changing any assumptions that prove false to facts.
Pardon me. I have to stop typing for a moment. The idea of a Leftwinger actually doing this honest mental act is so outrageous, that I am overcome by a paroxysm of epileptic laughter, and must steady myself ere I faint.
John C. Wright, “Unreality and Conformity of the Left”, Everyjoe, 2015-07-05.
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March 9, 2017
Words & Numbers: Women Prosper When Markets Are Free
Published on 8 Mar 2017
This week, in honor of International Women’s Day, Antony & James discuss the strong correlation between economic freedom and gender equality found across the world. They argue that if you want to see a world of increasing equality and opportunity for women, you also want to free the economy from central planning and control.
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March 5, 2017
The political Trojan Horse of “Pigouvian taxes”
Warren Meyer used to be quite positive about the introduction of Pigouvian taxes, but recently his opinion has changed:
Here is the Wikipedia definition of a Pigovian tax:
A Pigovian tax (also spelled Pigouvian tax) is a tax levied on any market activity that generates negative externalities (costs not internalized in the market price). The tax is intended to correct an inefficient market outcome, and does so by being set equal to the social cost of the negative externalities. In the presence of negative externalities, the social cost of a market activity is not covered by the private cost of the activity. In such a case, the market outcome is not efficient and may lead to over-consumption of the product. An often-cited example of such an externality is environmental pollution.
The Left often tries to justify new taxes based on their being Pigovian taxes. The classic example is a carbon tax — it is claimed there is a social cost to carbon-based fuel combustion (e.g. CO2 production and resulting global warming) that is not taken into account by market prices. By adding the tax, these other costs can be taken into account, likely raising the price of these fuels and thus both reducing their use and providing a higher price umbrella for alternatives.
For years, I accepted these arguments at face value. I might argue with them (for example, I think that the Left has tended to spot 10 of the last 2 true negative externalities), but I accepted that they really believed in the logic of the Pigovian tax. I am now becoming convinced that I was wrong, that the Left’s support of Pigovian taxes is frequently a front, a way of putting a more palatable face on what is really a naked grab for more taxpayer money by public officials.
Soon after discovering the concept of Pigouvian taxes, I suspected that — even if the economics were sound — no human government was going to implement such a tax in the pure form: there would always be “good reasons” to make the new tax non-revenue-neutral, because once a revenue stream has been established, it’s unlikely the government will actually shut it down afterwards. I have yet to be disappointed in this expectation.
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Splitting GDP
Published on 21 Nov 2015
In the last three videos, you learned the basics of GDP: how to compute it, and how to account for inflation and population increases. You also learned how real GDP per capita is useful as a quick measure for standard of living.
This time round, we’ll get into specifics on how GDP is analyzed and used to study a country’s economy. You’ll learn two approaches for analysis: national spending and factor income.
You’ll see GDP from both sides of the ledger: the spending and the receiving side.
With the national spending approach, you’ll see how gross domestic product is split into three categories: consumption goods bought by the public, investment goods bought by the public, and government purchases.
You’ll also learn how to avoid double counting in GDP calculation, by understanding how government purchases differ from government spending, in terms of GDP.
After that, you’ll learn the other approach for GDP splitting: factor income.
Here, you’ll view GDP as the total sum of employee compensation, rents, interest, and profit. You’ll understand how GDP looks from the other side — from the receiving end of the ledger, instead of the spending end.
Finally, you’ll pay a visit to FRED (the Federal Reserve Economic Data website) again.
FRED will help you understand how GDP and GDI (the name for GDP when you use the factor income approach) are used by economists in times of economic downturn.
So, buckle in again. It’s time to hit the last stop on our GDP journey.
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February 28, 2017
Outbreak of World War 1 – A Banker’s Perspective I THE GREAT WAR Special
Published on 27 Feb 2017
The classic narrative of the outbreak of World War 1 is that everyone saw it coming and was awaiting it with patriotic fervor. But studying the people that profited most from a war, the bankers, that idea is definitely challenged.
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QotD: “Mr. Keynes’ excellent little book”
Interestingly, Mussolini found much of John Maynard Keynes’s economic theories consistent with fascism, writing: “Fascism entirely agrees with Mr. Maynard Keynes, despite the latter’s prominent position as a Liberal. In fact, Mr. Keynes’ excellent little book, The End of Laissez-Faire (l926) might, so far as it goes, serve as a useful introduction to fascist economics. There is scarcely anything to object to in it and there is much to applaud.”
After the worldwide Great Depression, Mussolini became more vocal in his claims that fascism explicitly rejected the capitalist elements of economic individualism and laissez-faire liberalism. In his “Doctrine of Fascism,” Mussolini wrote: “The Fascist conception of life accepts the individual only in so far as his interests coincide with the State. . . . Fascism reasserts the rights of the state. If classical liberalism spells individualism, Fascism spells government.” In his 1928 autobiography, Mussolini made clear his dislike for liberal capitalism: “The citizen in the Fascist State is no longer a selfish individual who has the anti-social right of rebelling against any law of the Collectivity.”
Lawrence K. Samuels, The Socialist Economics of Italian Fascism, quoted by Perry de Havilland in “Mussolini admired ‘Mr. Keynes’ excellent little book'” at Samizdata, 2015-07-08.
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February 27, 2017
Real GDP Per Capita and the Standard of Living
Published on 20 Nov 2015
They say what matters most in life are the things money can’t buy.
So far, we’ve been paying attention to a figure that’s intimately linked to the things money can buy. That figure is GDP, both nominal, and real. But before you write off GDP as strictly a measure of wealth, here’s something to think about.
Increases in real GDP per capita also correlate to improvements in those things money can’t buy.
Health. Happiness. Education.
What this means is, as real GDP per capita rises, a country also tends to get related benefits.
As the figure increases, people’s longevity tends to march upward along with it. Citizens tend to be better educated. Over time, growth in real GDP per capita also correlates to an increase in income for the country’s poorest citizens.
But before you think of GDP per capita as a panacea for measuring human progress, here’s a caveat.
GDP per capita, while useful, is not a perfect measure.
For example: GDP per capita is roughly the same in Nigeria, Pakistan, and Honduras. As such, you might think the three countries have about the same standard of living.
But, a much larger portion of Nigeria’s population lives on less than $2/day than the other two countries.
This isn’t a question of income, but of income distribution — a matter GDP per capita can’t fully address.
In a way, real GDP per capita is like a thermometer reading — it gives a quick look at temperature, but it doesn’t tell us everything.It’s far from the end-all, be-all of measuring our state of well-being. Still, it’s worth understanding how GDP per capita correlates to many of the other things we care about: our health, our happiness, and our education.
So join us in this video, as we work to understand how GDP per capita helps us measure a country’s standard of living. As we said: it’s not a perfect measure, but it is a useful one.
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February 23, 2017
Words & Numbers: The CBO Can’t Count
Published on 22 Feb 2017
In this episode, Dr. Antony Davies, Professor of Economics of Duquesne University in Pittsburgh, and Dr. James R. Harrigan, Senior Research Fellow at Strata, in Logan, Utah discuss the way the Congressional Budget Office works, and outline its history of failure at accurately forecasting increases in the national debt.
Find out more about the CBO and debt projections here:
https://fee.org/articles/the-congressional-budget-office-cant-countand here:
http://www.huffingtonpost.com/entry/58a0810be4b0e172783a9daaPlus, check out this great 360 Video from Learn Liberty with Antony Daves that helps put the massive scale of the current US Federal debt into perspective: https://www.youtube.com/watch?v=ErUZjM16r1M
And track the National Debt in real time here:
http://www.usdebtclock.org/
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February 19, 2017
Nominal vs. Real GDP
Published on 19 Nov 2015
“Are you better off today than you were 4 years ago? What about 40 years ago?”
These sorts of questions invite a different kind of query: what exactly do we mean, when we say “better off?” And more importantly, how do we know if we’re better off or not?
To those questions, there’s one figure that can shed at least a partial light: real GDP.
In the previous video, you learned about how to compute GDP. But what you learned to compute was a very particular kind: the nominal GDP, which isn’t adjusted for inflation, and doesn’t account for increases in the population.
A lack of these controls produces a kind of mirage.
For example, compare the US nominal GDP in 1950. It was roughly $320 billion. Pretty good, right? Now compare that with 2015’s nominal GDP: over $17 trillion.
That’s 55 times bigger than in 1950!
But wait. Prices have also increased since 1950. A loaf of bread, which used to cost a dime, now costs a couple dollars. Think back to how GDP is computed. Do you see how price increases impact GDP?
When prices go up, nominal GDP might go up, even if there hasn’t been any real growth in the production of goods and services. Not to mention, the US population has also increased since 1950.
As we said before: without proper controls in place, even if you know how to compute for nominal GDP, all you get is a mirage.
So, how do you calculate real GDP? That’s what you’ll learn today.
In this video, we’ll walk you through the factors that go into the computation of real GDP.
We’ll show you how to distinguish between nominal GDP, which can balloon via rising prices, and real GDP—a figure built on the production of either more goods and services, or more valuable kinds of them. This way, you’ll learn to distinguish between inflation-driven GDP, and improvement-driven GDP.
Oh, and we’ll also show you a handy little tool named FRED — the Federal Reserve Economic Data website.
FRED will help you study how real GDP has changed over the years. It’ll show you what it looks like during healthy times, and during recessions. FRED will help you answer the question, “If prices hadn’t changed, how much would GDP truly have increased?”
FRED will also show you how to account for population, by helping you compute a key figure: real GDP per capita. Once you learn all this, not only will you see past the the nominal GDP-mirage, but you’ll also get an idea of how to answer our central question:
“Are we better off than we were all those years ago?”
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February 16, 2017
Words & Numbers: The Customer is Always Taxed
Published on 15 Feb 2017
We’re really excited to present the first episode of what will be an on-going video podcast featuring Dr. Antony Davies, Professor of Economics of Duquesne University in Pittsburgh, and Dr. James R. Harrigan, Senior Research Fellow at Strata, in Logan, Utah.
Each Wednesday we’ll be sharing a new short video featuring Antony and James talking about the economics and political science of current events. We hope you enjoy the show and look forward to your input on what topics Antony and James should cover in the future.
Today’s episode is about everybody’s favorite subject: Taxes!
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February 15, 2017
CANZUK gets a boost from the Financial Post
Andrew Lilico discusses the potential benefits to Canada, Australia, New Zealand, and the UK if these countries work on forming a four-way free trade deal:
The idea of CANZUK begins with a free-trade agreement, free-movement area (the freedom to live and work in each others’ countries) and defence-partnership agreement. O’Toole favours all three of these main planks, and he’s right that it all makes perfect sense.
The CANZUK countries, working closely together, would make a formidable contribution to world affairs. They would have the largest total landmass of any free-trade zone. They would collectively constitute the fourth-largest market in the world, after the U.S., EU and China.
Their combined military spending would be the world’s third largest, well ahead of Russia, and on European Geostrategy’s geopolitical power index, the CANZUK countries collectively have a strength around 70 per cent of that of the U.S. — and nearly twice that of China or France. With a combined global trade footprint nearly twice as big as Japan’s, the CANZUK countries would have substantial influence in opening up global markets and guiding global regulation across a range of issues from banking to shipping to the environment.
What makes CANZUK a natural union is perhaps self-evident. Canada, the U.K., Australia and New Zealand share a similar culture, similar values, and analogous legal, business and social systems that allow us to get along easily and interchangeably. (The term CANZUK was originally a term diplomats used to refer to these four countries because of how frequently they would vote the same way at the UN.)
Most of the main issues our political parties focus upon are instantly comprehensible to anyone from another CANZUK state. Our laws and constitutions share many features, making trade deals and mutual regulatory recognition a relatively straightforward matter. Our citizens enjoy a roughly similar per capita GDP (which is just not true of the other Commonwealth nations with similar constitutions) and face few hurdles in integrating into another CANZUK country’s labour market. Our societies are peaceful and orderly.
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February 13, 2017
What is Gross Domestic Product (GDP)?
Published on 18 Nov 2015
Picture the economy as a giant supermarket, with billions of goods and services inside. At the checkout line, you watch as the cashier rings up the price for each finished good or service sold. What have you just observed?
The cashier is computing a very important number: gross domestic product, or GDP.
GDP is the market value of all finished goods and services, produced within a country in a year.
But, what does “market value” mean? And what defines a “finished good”?
These, and more questions, percolate inside your head. Meanwhile, the cashier starts ringing up the total, and you’re left confused. An array of things pass by you — A bottle of wine. A carton of eggs. A cake from the local bakers. A tractor, of all things. A bunch of ballpens. A bag of flour.
In this video, join us as we show you how to make sense of this important economic indicator. You’ll learn how GDP is computed, and you’ll get answers to some pretty interesting questions along the way.
Questions like, “Why are the eggs in my homemade omelet part of the GDP, but the eggs my baker uses are not? Why does my bottle of French wine contribute to France’s GDP, even if I bought it in the United States?”
Most importantly, you’ll also learn why polar bears aren’t part of the GDP computation, even if they’re incredibly cute.
So, buckle in for a bit—in the following videos we’ll dive into specifics on GDP.
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